Some Technical Damage

Bears have dominated the day today, though that hasn't actually delivered a lot of downside on SPX or NDX. We may see a late rally into the close. Bigger picture this is day five of the daily upper band ride and if we see a weak close today and that follows through on Monday that would open a possible test of the daily middle band, currently at 2360. SPX daily chart:

The possible rising channel that I posted on Wednesday is still looking good. Channel support is now in the 2375 area, supported by the 50 hour MA at 2374. A break below channel support would be a significant technical break. SPX 60min chart:

The ES and NQ futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. The TF chart was done shortly after the RTH open. If you are interested in trying our services a 30 day free trial is available here.

On ES falling support is now in the 2375 area and is likely to cross SPX rising channel support on Monday morning. The 60min sell signal has now reached the possible near miss target. ES Jun 60min chart:

On NQ the initial rising wedge evolved into a rising channel and that rising channel has now broken down. The high on NQ could be in, but until we see a break down with more enthusiasm my working assumption is that the current high on NQ requires at least a retest. NQ Jun 60min chart:

On TF the 60min sell signal has made target and rising support is now in the 1393 area. That is a decent looking match with trendline support below on ES/SPX. These may require a test before any return to retest the highs. TF Jun 60min chart:

I think what we are seeing here is most likely what we call the low before the high, which is the last decline before a swing high is made. Some technical damage has been done, with SPX breaking below yesterday's low, and NQ breaking the rising channel. It could be that the swing high is already in, but until we see more evidence it's more likely that there is one last retest coming.

Waiting For A Break

Yesterday opened and closed between the daily upper 2sd and 3sd upper bands, but that has changed today with the 2sd upper band established as resistance in the morning and afternoon. Today is day four of the daily upper band ride, which continues until a day when the daily 2sd upper band isn't tested as resistance. SPX daily chart:

The rising channel on my SPX hourly chart still looks good. Rising channel support is now in the 2370 area and a break below would likely signal that this swing high has been made. SPX 60min chart:

The setup on ES is still in the balance, but a clear H&S formed yesterday and overnight and broke down this morning. That H&S has failed and if we see a break over the 2389/90 I mentioned in the notes before the open as the ideal high for that H&S right shoulder, then the clear target would be a retest of yesterday's high. While that area is still holding as resistance though, it's possible that the right shoulder is forming now, and that the H&S setup here is still in play. ES Jun 60min chart:

ES, NQ and TF are all on 60min sell signals that fixed yesterday or this morning, with NDX and RUT still on daily RSI 14 sell signals. This setup could still very much resolve down, and on a break back below 2370 SPX this swing high might well be in.

A Battle Of The Bands

Yesterday was the third day of a daily upper band ride and was of a stronger type where the daily 2sd (two standard deviations away from the middle band) upper band acted as support and the daily 3sd upper band acted as resistance. The 2sd upper band is currently at 2388 and the 3sd upper band is in the 2404 area, so a retest of the ATH on SPX is under that resistance today. Today's low was at 2388 and the high so far is at 2398. Unless we see a break back under 2388 with some confidence we may well see that ATH retest today. SPX daily chart:

On the hourly chart I have a possible rising channel forming and the next obvious target would be rising channel support, currently in the 2365 area but rising fast. If we do see a break down with confidence today that trendline would be the obvious target. SPX 60min chart:

The futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

ES has backtested broken rising wedge support and this is a possible fail area. A full size possible 60min sell signal is now brewing. ES Jun 60min chart:

NQ is continuing to struggle hard in the 5550 area, which is a big trendline resistance level on the longer term chart. NQ could well be topping here. NQ Jun 60min chart:

TF is close to touching strong rising resistance, currently in the 1428 area. As with both SPX and NDX, RUT is testing a big long term resistance trendline here. A full size 60min sell signal is now brewing. TF Jun 60min chart:

This is a big long term resistance area on all of SPX, NDX and RUT. The middle of the current cycle high window was yesterday and triangle thrusts of the kind that we are seeing here on SPX and RUT are generally termination moves ending a wave sequence. The odds favor a high here, and the calendar favors it too, with the end of April and the start of May being the most densely populated date range of the year for significant highs. The odds favor the bears here and I'm watching for that high.

Extending and Extended

I was saying yesterday morning that bulls wanted to hold 2368/9 on the backtest to go higher. The low of the day was 2369.19 and here we are. Short term though there is some formidable resistance at the daily 3sd (three standard deviations away from the middle band) upper band at 2394. Breaks over this level are rare, and an actual retest of the high will likely need to wait until tomorrow, when the 3sd upper band will be higher. SPX daily chart:

With yesterday's backtest, this is a thrust up from a triangle, and when the thrust up completes then we should see a full retracement back to 2369. These moves tend to be terminal moves, the last move in a wave sequence, so that fits with the high window that SPX is in at the moment, and the high made here should last for several months. SPX 60min chart:

The futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

ES is heading towards an ATH retest, and a possible weak 60min sell signal is now brewing. No clear pattern for this thrust up that I have identified so far. ES Jun 60min chart:

Overnight NQ tested the possible rising megaphone resistance that I was looking at earlier and that held for a few hours before breaking up. This could be a bearish overthrow move but if that is the case then NQ really shouldn't go much higher. NQ is testing serious trendline resistance on the bigger picture charts in the 5550 area. This move today has failed the 60min sell signal and there is no current 60min negative divergence. NQ Jun 60min chart:

TF has made a marginal new ATH as expected and that's holding as resistance so far. Yesterday's 60min sell signal on TF has also failed, along with all six of the RSI 14 and RSI 5 sell signals on the 15min charts that all fixed in the last hour of RTH yesterday. TF Jun 60min chart:

I would very much like to see a full retest of the all time high on SPX, as that would set strong weekly sell signals brewing. If we are going to see that full retest then I'd expect to see that tomorrow or on Thursday at the latest. Ideally there would be a sharp retracement first and then a high retest to set up negative divergence on the daily and hourly charts.

The 5dma Three Day Rule - Day Three

ES/SPX found support where expected on Friday and reversed back up towards triangle resistance as expected, and then gapped over that at the Sunday globex open and the SPX RTH open, which was not expected. The triangle may be breaking up with a target at the retest of the all time high, and the opening gap up from 2355.84 is a candidate breakaway gap into that retest. There is a possible high here, but bears need to break down hard and fill that breakaway gap, ideally today, at latest tomorrow. Otherwise SPX likely retests the all time high. The 5dma is currently at 2351 and is likely out of reach for a close below absent a serious news bomb today. SPX daily 5dma chart:

On the 60min chart SPX is close to a backtest of broken triangle resistance, currently in the 2367/8 area. A break below triangle resistance opens a possible gap fill move. The rising megaphone on the RSI 14 is cautiously bearish. SPX 60min chart:

The futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

ES backtested broken triangle resistance after the gap above it overnight and is retesting it again as I write at 2365/6. If that holds as support then bulls can try to retest the globex high, and on a break above I have a rising wedge target at 2379 and obviously a possible retest of the all time high above that. ES Jun 60min chart:

On NQ the globex high (at a new all time high) established a decent quality rising channel, and if that holds then the next obvious target within the channel is channel support, currently in the 5360 area. If channel resistance breaks slightly then there is possible alternate rising megaphone resistance currently in the 5512.50 area, and on a sustained break above that I have no obvious further resistance trendlines on NQ. This setup leans cautiously bearish (under 5512.50) with NQ still on a 60min sell signal from Friday morning. NQ Jun 60min chart:

The 60min sell signal on TF failed on the spike up overnight and a decent quality rising channel from last week's lows was established at the globex high. Since then the channel has held, a possible small double top is forming and a second 60min sell signal has fixed. Rising channel support is currently in the 1384 area. Again this setup leans cautiously bearish. TF Jun 60min chart:

The globex high was at the maximum area on ES that Stan gave on his weekend video and our main scenario has ES/SPX failing here into a downtrend that lasts into the summer. To deliver that bears need to impress today or at least tomorrow. That's the 70% option. The 30% option is a retest of the all time high. On a break over 2380.0 ES that high retest becomes the 70% option. Either way that downtrend into the summer should be starting within days, and may obviously have already started. In the short term, absent a more enthusiastic decline getting started, the setup so far today on SPX looks like a bull flag forming from the opening high at 2374.86.

Back On The 5dma Three Day Rule

The decline from 2378.36 to 2328.95 wasn't big, but it was over 2%, if only just at 2.08%. That means that with the daily close back over the 5dma yesterday SPX is back on the 5dma Three Day Rule, which states that on a daily close back (more than 2 handles) below the 5dma on either of the two trading days after the break back above, the last swing low below the 5dma (at 2328.95) should be retested before the last swing high above the 5dma (at 2378.95) is retested. This is a very strong statistic, though in this case the preceding move obviously wasn't large. The 5dma is currently at 2347 and may close several handles away from that number depending on what happens before the close. SPX daily 5dma chart:

Support for this (probably) backtest is at the daily middle band at 2352 and the 5dma at 2347, both on a daily closing basis, and the 50 hour MA at 2345. The break over the daily middle band yesterday needs to be confirmed with a close above today. SPX 60min chart:

The futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

On ES before the open I was concerned that ES had held support at broken rising wedge resistance overnight, as that was supporting a break through triangle resistance in the 2368 area towards a rising wedge target at 2379. Obviously that's no longer a concern. I'm leaning towards a test of triangle resistance before likely continuation down, but that's not strictly required if ES doesn't recover some of the losses so far today. ES Jun 60min chart:

A 60min sell signal fixed on NQ just before the open today and hasn't made target yet, mainly as NQ hasn't actually dropped much so far. There is a small double top target at 5425 that has not quite been made and short term rising support is now in the 5419-20 area. NQ Jun 60min chart:

A 60min sell signal fixed on TF well before the open and that hasn't made target yet either. With the NQ sell signal that is suggesting some more downside, but it's not unusual to make a higher high before making the signal target, so it may be that we see a reversal back up without making those targets. TF Jun 60min chart:

If we do see more downside on SPX/ES today and that holds into the close then that would be very bearish, albeit only into a retest of 2328.95. There are obvious targets above on NQ (IHS target at 5465 then possible ATH retest) and TF (IHS target 1384.75 area) that haven't yet been reached, and I'm doubtful about seeing the downtrend resume without making those targets. If we retest 2328.95 directly from here then that might be the second low of a small double bottom.

Everyone have a great weekend :-)

Triangle Support, Maybe

I had a very busy day yesterday and didn't manage to get a post out. Hopefully some of you caught my premarket tweet which captured the day nicely:

So what about those lower lows, which we haven't seen yet? We the pattern setup is clear enough, with a small rising wedge that formed from the 2328.95 low and has broken down with a minimum target at a retest of 2328.95. To get there however the possible triangle support would have to break, and that's at 2331 and hasn't broken yet. While that triangle support holds SPX may still be returning to triangle resistance, currently in the 2371-3 area. On a break below that triangle support the downside opens up, and SPX can go considerably lower.

Resistance on the daily chart is clear at the daily middle band and 50dma, currently at 2352 and 2354 respectively. While those hold as resistance the overall trend is likely to be down. I would mention though that RUT broke back above the daily middle band yesterday and a confirming close above today would be bullish, and that NDX gapped over the daily middle band yesterday morning and traded the whole day above it. The NDX close wasn't a clear break over the middle band, but both RUT and NDX have traded the day so far above their daily middle band and if they can hold that into the close that would be bullish for both. SPX daily chart:

SPX also needs at least some downside today to avoid bullish looking breaks. the 50 hour MA is currently at 2345 and has been resistance so far this morning. Any break above needs to fail, and the the important 5dma, which has held on a daily closing basis for all of the last eleven trading days also needs to hold today, and is currently at 2339. If bears can't break below triangle support on SPX today or at latest tomorrow morning, significant bullish resistance breaks are almost inevitable. Unusually for the bears they've managed to maintain overall downward pressure over the last three weeks but they really need this consolidation move to break down. SPX 60min chart:

The futures charts below were done before the open for Daily Video Service subscribers at theartofchart.net. If you are interested in trying our services a 30 day free trial is available here.

On ES there is a possible upsloping H&S forming here and the ideal right shoulder high would be in the 2346 area. Stan is looking for 2348 as main resistance that needs to not be converted to support to avoid a bullish break. I've been looking at 2350 so 2348-50 looks like main resistance today. ES Jun 60min chart:

NQ has reached the first obvious target at the retest of yesterday's high. On a break higher trendline resistance is currently in the 5440-5 area. The obvious fail area for today however has already been reached. NQ Jun 60min chart:

TF has also reached the obvious first target at the retest of yesterday's high with the monthly pivot and likely triangle resistance. Again this is even more obviously the reversal area if TF isn't going to break up, and that's holding so far. TF Jun 60min chart:

If this was a bullish setup my confidence that the setup would play out would be very high. Even as a bearish setup, with the bears having had so many performance issues over recent years, I'm favoring resolution down as the 70% option. The 30% option is a break up towards possible resistance in the 2371-3 SPX area. We'll see.

Stan and I are doing a free public educational webinar at theartofchart.net an hour after the close tonight and if you'd like to see that you can sign up for that on this page here. The recording for our public Big Five webinar last Thursday on AAPL, AMZB, FB, NFLX and TSLA is posted on the same page and well worth watching if you trade any of these. There is also a 30 day free trial available for that service on this page here.

Coming Off The Lows

A decent rally yesterday that took SPX back into a retest of the 50 hour MA as resistance. That's currently at 2349/50 and supported by the daily middle band at 2352 and the 50dma at 2354. The current SPX low is at a possible triangle support trendline and if that resistance zone can be broken then declining resistance from the high and possible triangle resistance is currently in the 2372-4 area.

SPX 60min chart:

SPX daily chart:

The futures charts are from before the open and were prepared for my premarket video for Daily Video Service subscribers at theartofchart.net. I posted that video on my twitter this morning and you can see that here.

A weak 60min sell signal fixed on ES overnight and the key support/resistance level is the weekly pivot at 2338.25, which bulls need to convert to support to go higher. ES Jun 60min chart:

A weak 60min sell signal also fixed on NQ overnight and again NQ has so far failed to convert the weekly pivot at 5383 to support. NQ hasn't been much below it so far today though. NQ Jun 60min chart:

TF has been the weakest so far today, which is encouraging for bears, and is well below the weekly pivot at 1354.40 there. TF Jun 60min chart:

I was mentioning last week that the historical stats for this week were impressively bullish and yesterday delivered on that. The remaining days this week all lean over 60% bullish into April expiry on Friday. The trend is down until demonstrated otherwise, but shorts should be wary.

Stan and I are doing a free public educational webinar on risk management an hour after the close on Thursday at theartofchart.net and if you'd like to attend you can register for that here. On the same page is the webinar we did last Thursday on our Big Five stocks, AAPL, AMZN, FB, NFLX & TSLA, which is well worth watching if you ever trade any of those.

Holiday Tape So Far

Lower lows on ES and NQ in globex overnight and that was bearish, kinda, or at least it would have been if the lows hadn't been marginal on positive RSI divergence that has since delivered fixed buy signals on NQ and TF, and setting up double bottoms that have now broken up on ES, NQ and TF. The breaks are marginal on ES and TF so far with NQ almost at target, and if bears are going to turn this today then it should be here at the test of the 2350 SPX area. A hard reversal here would looks for further lower lows, but a sustained break up would likely deliver the day to the bulls. All the targets and setups are marked on the charts below.

SPX 60min chart:

SPX daily chart:

The futures charts below were produced premarket for Daily Video Service subscribers at theartofchart.net. 30 day free trials are available here. I was mainly looking at the upside risk and that's always on my mind on the last trading day before a holiday.

ES Jun 60min chart:

NQ Jun 60min chart:

TF Jun 60min chart:

Today is a cycle trend day and the trend for the first couple of hours has 70% odds of lasting all day. There is a decent case for going lower otherwise but I'm not certain that matters today. Maybe. Everyone have a great holiday weekend. :-)

Stan and I are doing a free public webinar after the close today on our Big 5 stocks, which are AMZN, AAPL, FB, NFLX and TSLA. If you'd like to attend you can sign up for that here.

Still Waiting For A Break

We saw the break down to a lower low as I was expecting in the premarket video yesterday, and found support and reversed there as I suspected might happen, as the potential rising channel on TF that I was looking at before the open was established. So where did that leave the indices at the end of the day?

RUT was the strongest and broke over resistance at the 50 hour MA and daily middle band into a high testing the 50dma. That break over the middle band needs a confirming close above it again today. SPX fell away from resistance at both 50 hour MA and daily middle band. NDX was the most bearish, falling away from 50 hour MA resistance and closing marginally below the daily middle band, which had been strong support Thursday through Monday. That break under the middle band needs a confirming close under it again today.

Resistance on the SPX daily chart is at the daily middle band at 2359 and support is at the daily middle band at 2335. SPX daily chart:

I'm considering possible falling wedge or triangles on SPX 60min within the overall falling megaphone. The wedge has already been established overnight on the ES chart. Resistance at the 50 hour MA is at 2358, just under the daily middle band. SPX 60min chart:

The futures charts below were produced premarket for Daily Video Service subscribers at theartofchart.net. 30 day free trials are available here.

On last night's chart for subscribers at theartofchart.net I was looking at possible falling wedge resistance in the 2357 area overnight and that trendline was confirmed at the globex high. The next obvious target would be wedge support currently at 2332, and on a break higher I'd expect a test of falling megaphone resistance currently in the 2372.5 area. What is potentially interesting with cycle trend days today and tomorrow is the possibility that the falling wedge might take the 30% option and break down rather than up. The target in that case would be in the 2290 area, not far above falling megaphone support currently in the 2280-2 area. ES Jun 60min chart:

NQ held the weekly and monthly pivot resistance zone overnight and as long as that remains the case the obvious path is down. NQ Jun 60min chart:

TF may again hold the key today, with a globex high that may be evolving the rising channel into a 70% bearish rising wedge. A small double top has broken down with a target at a retest of rising channel or wedge support, currently in the 1364 area. A test or break of that support trendline would confirm the rising wedge. TF Jun 60min chart:

As long as ES and NQ fail to convert the strong weekly and monthly pivot zones above the obvious lean is short. If they manage to convert these to support we could see a short squeeze. Bears really need a trend down day to do some damage, with the holiday weekend approaching and the stats for next week leaning strongly bullish. We'll see what they can manage today.

Stan and I are doing a free public webinar after the close tomorrow on our Big 5 stocks, which are AMZN, AAPL, FB, NFLX and TSLA. If you'd like to attend you can sign up for that here.

Signs of Life

If there's one thing that has really stood out over the last few months it has been the SPX tape's tendency to just stop doing anything interesting for several days at a time. SPX has tested the daily middle band as resistance every day for a coma-inducing eight days, but I was saying in my premarket video to Daily Video Service subscribers at theartofchart.net  an hour before the open that there was good reason to think that we would see breaks down on equity indices today, and we may well be seeing the start of that now. You can see that premarket video here. SPX daily chart:

On the hourly charts SPX, NDX & RUT were all testing the 50 hour MA all day yesterday and failed to sustain a break above. SPX 60min chart:

All the futures charts here were done for the video an hour before the open.

What I was looking at on the ES chart this morning was the weekly pivot holding as support last night and the triangle on RSI breaking down with a high probability (80%+) target at 30 on RSI. That has not yet made target at the time of writing and I'm expect it to deliver at least a retest of the recent low at 2336.50. That's as far as this setup will take ES so any further downside the bears will have to deliver on their own. ES Jun 60min chart:

The setup on NQ was very similar, but unlike ES NQ has already made the targets both at the retest of the recent low and at the test of the 30 level on RSI. NQ Jun 60min chart:

My concern here is TF, which has been the strongest of the three indices this week and where the RSI megaphone has not yet broken down. TF has found support at 1359.5 so far this morning and rejected there so far. That low has established the possible rising channel on TF that I was talking about in the premarket video, and if we are to see a serious leg down from here, that channel is going to need to be broken.  If the channel isn't broken then the next obvious target within the channel is channel resistance, currently at 1382.50. TF Jun 60min chart:

If we are going to see another leg down then the odds favor that starting right here. If this is just a final attempt to break support before the ATH retests that are likely coming within a few weeks in any case then that TF rising channel likely holds and the next resistance tests may well deliver a break up. Either way we should see the tape start to move which will make a pleasant change.